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Oregon, “Its Big Pot Glut”


Drivers heading north on I-5 in Southern Oregon not only enjoy the region’s towering mountains and evergreen forests, they are also treated to the occasional enticement.

At various points along the way, giant billboards appear, broadcasting messages like “NEED WEED? Exit Here” and the succinct “MARIJUANA! This exit.”

The popular Blue Dream strain is available for $2 gram or $45 oz in 1 Oregon shop. That’s not unusual, and when motorists pull off the highway and wander into those shops, they are finding weed at unbelievable prices.

One shop offered grams of the popular Blue Dream strain for $2, and bargain-hunting buyers could walk out with an ounce for only $45. A number of other strains were also available for $100 oz or less.

It’s no fluke. Walk into any marijuana store in Oregon, and you will find perfectly acceptable grams packages for $2 or $3. Yes, it is typically outdoor marijuana, which store clerks will tell you goes for less because it does not get the same level of care and attention that indoor or greenhouse weed does.

But the real reason is that outdoor weed gets 1 Key ingredient that is light for free from the Sun. At $2 gram, indoor and greenhouse growers are barely recovering production costs; outdoor growers have a little more wiggle room.

If you are feeling particularly Californian, you can still pay $10 or $12 a gram if you want, but that $2 weed is going to get you just as high as that $12 weed. And state regulations let you know the THC content of anything you buy, including high octane strains at bargain basement prices.

Oregon’s cheap pot prices are a boon to consumers and the state’s tax revenues. With retail prices falling by half last year, consumption jumped by around 30% over the previous year, driving tax revenues past the $94-M mark by year’s end. But while marijuana consumers are happy and pot tax coffers are full, but the situation is not so great for the state’s legal pot producers.

Unlike other early legalization states, such as Colorado and Washington, Oregon placed few limits on who could grow legal commercial marijuana, and the result has been overgrowth of epic proportions.

According to the state Oregon Control Commission (OLCC), the agency that regulates marijuana, at the end of the Fall harvest last year, Oregon produced enough legal marijuana to supply the state’s needs for the next 6 years.

You do not need a degree in economics to understand how the law of supply and demand is driving prices down.

OLCC has the raw data to show it

The wholesale price of indoor marijuana peaked at around $2,200 lb in late Y 2017 before steadily declining to its current level of about $1,000 lb.

For outdoor marijuana, which accounts for the vast majority of Oregon production, the price peaked at about $1,500 in late Y 2016, declined to about $1,000 lb in late Y 2017, and slid even further to under $500 lb after last year’s harvest.

For the OLCC, the glut is a sign that the system is working: “Oregon oversupply is a sign that policy choices made to attract illegal and grey market producers into the new commercial system have been successful; this was a start-up challenge Colorado and Washington did not have to face,” the regulators noted. “Oregon medical marijuana growers had long been suspected of diverting into the illegal market so it was important to attract these well-established producers into the OLCC’s new regulated recreational marijuana program. To entice medical as well as formerly illegal growers into Oregon’s legal market the state lowered the barriers to entry with low license fees and taxes and chose not to limit the number of licenses.”

Still, the OLCC conceded that while that approach “fulfilled the immediate objective” of absorbing growers into the legal market,” it has also “led to industry churn as businesses face mounting cost pressures and attempt to position themselves for the long term.”

Now, fearing that “industry churn” could lead some businesses to try to sell their products on the black market or outside the state, lawmakers have moved to rein in production.

This year, lawmakers enacted legislation that for the 1st time allows the OLCC to stop issuing new production licenses when supply exceeds demand.

They also moved to seek broader markets for the state’s legal marijuana, passing a bill that would allow growers to sell their product out of state. But that isn’t going to happen without federal approval, and there is no sign of that in the immediate future.

Still, 2 Democrats who represent Oregon in Congress, Sen. Ron Wyden and Rep. Earl Blumenauer, last month filed a bill that would allow for interstate commerce between states with legal marijuana programs.

Some legal pot farmers have gone bankrupt, others have just left the business, but a sizable number have now switched to yet another cannabis product: Hemp.

In Y 2015, there were only 13 registered hemp growers in the state. Now there are more than 750. And the number of acres devoted to hemp production jumped dramatically as well, from 105 acres in Y 2015 to more than 22,000 now. That is because hemp can be exported since it is now legal under federal law, and because of the boom in CBD products, which can be derived from low-THC hemp as well as from marijuana. With those push factors, the price of hemp flowers, now going for around $350-$700 a pound, is getting close to and sometimes surpassing the price of outdoor marijuana.

Oregon’s legal marijuana market continues to evolve, and, as the OLCC put it, the industry will continue to churn. There are going to be winners and losers among the producers, but for Oregon marijuana consumers, these are the “best of times“.

By Philip Smith

Paul Ebeling, Editor

Permission to Reprint: This article is licensed under a modified Creative Commons Attribution license.Looking for the easiest way to join the anti-drug war movement? You’ve found it!

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